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Mortgage Default Help

Whether as the result of a lost job, unexpected medical costs, or other unforseen expenses, many Americans find themselves delinquent on their home loan and facing mortgage default and the possibility of losing their home.

The Mortgage Bankers Association reported that in December 2007 the mortgage delinquency rate for residential property was higher than it had been in over 20 years. If you are one of the millions of American affected by this mortgage crunch, the following information and resources can help you avoid defaulting on your mortgage and possibly save your home.

Tips to Help You Avoid Default and Avoid Scams

What is a “Default”?

Technically, a default on your home mortgage occurs anytime you do not strictly abide by the terms and conditions of your loan agreement. Practically, though, the default most borrowers and lenders are concerned about is the default in payment.

Most home loans have a grace period from 10 to 15 days before delinquency charges start accruing. Although delinquency charges are unpleasant, they will not result in a default provided the regular loan payment and the delinquency charges are paid in a timely manner. This usually means that payment must be made within 30 days of the date the payment was orignally due, not 30 days from the end of the grace period. This can vary depending on the contract and the payment frequency, but for most home loans this period is 30 days.

Tips from Freddie Mac on Avoiding Foreclosure Scams

How Can I Avoid Default?

The only sure way to avoid default is to pay the entire amount of the late payment and any late fees that have accrued before the next payment is due and stay current thereafter. In most instances a late payment made within 30 days of the due date will not be reported to credit agencies. Payments made more than 30 days late typically are reported to credit agencies.

If you are unable to pay the entire balance, most lenders are sophisticated enough to realize that it benefits all interested parties for the lender to allow the borrower to catch up on the missed payment or payments, assuming the setback is truly temporary. This is your opportunity to make arrangements with your lender to pay what is overdue. Most reputable lenders will honor these agreements and let you get current.

If lateness becomes chronic or if nonpayment persists longer than 30-60 days, then the lender will begin the process of foreclosure.

Avoid Foreclosure

Home Loan Default Help

US Department of Housing and Urban Development
Homes and Communities: Tips for Avoiding Foreclosure from the United States Department of Housing and Urban Development

Lawyers.com: Mortgage Foreclosures
What to do, How to Negotiate with Your Lender, and Alternatives to Foreclosure

Avoiding Foreclosure After a Default

The best advice to avoid foreclosure is to talk to your lender. If necessary, ask your lender for a forbearance. A forbearance is an agreement to allow a short reprieve from payments because of a particular hardship (usually 1-3 months). The payments are most often added to the end of the term of the note. Be advised that your lender is under no obligation to agree to this, but you will never know unless you ask.

Alternatively, ask to make arrangements for repayment. Most lenders are willing to make payment arrangements to avoid incurring legal fees and expenses associated with foreclosure. If you are unable to make arrangements with your lender, your only option is the legal process.

The rights of the lenders and borrowers vary from state to state. However, generally speaking, before a lender is able to foreclose on a home used as a residence by the borrower, the lender must send the borrower a notice of default.

The form of the notice and the length of time between the notice and foreclosure will also vary from state to state. Typically, this notice of default is sent 60-90 days after the default. The notice of default begins the foreclosure process.

The good news is that the borrower can cure the default and keep the property by paying the outstanding balance, late fees and collection fees, if any, before the foreclosure process ends.

In many states there is also a right of redemption where the borrower can cure the default even after the property has been foreclosured and for up to some period of time thereafter.

US Department of Housing and Urban Development

Tips for Avoiding Foreclosure

HUD: 10 Tips for Avoiding Foreclosure
The US Department of Housing and Urban Development’s 10 Tips for Avoiding Foreclosure.

Housing Services

The US Department of Housing and Urban Development (HUD) provides a wide range of services to home owners and prospective home owners. In addition to providing assistance with first-time home buyers, HUD certifies housing counseling agencies to assist home owners who are having difficulty paying their mortgages. You can obtain housing counseling from HUD approved housing counseling agencies in your state.

The Federal Housing Administration (FHA) also provides assistance to home buyers and home owners. The FHA provides mortgage insurance on loans made by FHA approved lenders. There is a new FHASecure financing option that is available to FHA insured loans where the home owner has a history of timely payments before default or loan reset. You must qualify for FHA Secure financing. However, with FHASecure financing, you can lower your mortgage payment, get out of default, and avoid foreclosure.

There is also a HUD and FHA National Servicing Center to provide help to homeowners with FHA insured home loans. The goal of the servicing center is to help borrowers and lenders find creative ways to resolve default issues and avoid foreclsores. If you have an FHA insured loan, you can call 888-297-8685, the call is toll free. You can also write to: Department of Housing and Urban Development, National Servicing Center, 301 NW 6th Street, Suite 200, Oklahoma City, OK 73102.

Just recently, the Bush Administration announced “Project Lifeline”, a program designed to help home owners facing foreclosure. Project Lifeline would allow home owners who are at least 90 days behind in their mortgage payments to halt the foreclosure process for 30 days to assist them in getting caught up on mortgage payments. The plan initially involves six of the largest mortgage lenders, but home owners can only take advantage of this opportunity if they contact their lenders directly.

Bankruptcy.

What About Bankruptcy?

Bankruptcy should always be a last resort. However, a bankruptcy attorney may be able to help you avoid bankruptcy. For example, a bankruptcy lawyer may be able to make payment arrangments with your home loan lender. The lender may be more willing to accept repayment terms if a bankruptcy is looming.

Filing bankruptcy will never be pleasant, but if you are severly delinquent and facing an impending foreclosure, filing for protection under the bankruptcy laws may allow you to stop foreclosure and keep your home. Prior to filing, you will be required to participate in credit counseling and pass a means test to determine your eligibility. If you qualify and choose to file bankruptcy, you will make payments as ordered by the court.

Default Help and Alternatives

United Capital Mortgage Assistance
UCMA has been providing national mortgage assistance since 1997.

Find an Attorney to Help You

Foreclosure Law Firms
Find an Attorney in Your State to Help You With Foreclosure.

Find Law
Find a Bankruptcy and Debt Attorney to Help With Your Debt Problems.

Bankruptcy Law Firms
Bankruptcy Attorneys Can Help Stop Foreclosure.

Bargain Law
If You Need Legal Advice Now.

What To Do if You are in Danger of Default

Talk to your lender. Do not ignore the problem. It will not go away. You may be surprised how helpful your lender can be if you just talk to them. One thing is sure, you will never know if you never ask.

Ask for a forbearance. You might not get one, but if you are in a money crunch, it can give you some much needed breathing room.

Be realistic. Do not agree to a repayment plan you cannot honor. You will just make things worse. Be honest with your lender and try to work out something everyone can live with.

Budget. Budget for your mortgage payment and share your new budget with your lender. In other words, give your lender a reason why things will be different next time. Did you take a higher paying job but lose a paycheck or two in the mean time? These things matter.

Pay something. If your payment is $1,000.00 and you can only pay $250.00, pay it. First, your lender is more likely to help if you are making an effort. Second, you save money on interest. Third, $750.00 will be easier to repay than $1,000.00. The list is endless.

Beg, borrow, but don’t steal. Phone a friend, call a cousin, or something. Better to owe a buddy than a bank. Your buddy’s terms will probably be friendlier and your buddy probably cannot report you to a credit bureau.

Avoid Mortgage Default

Does Any of This Really Work?

The truest answer is “maybe”. But, do not despair. You are not alone. Most importantly, because you are not alone, lenders are more likely to work with you.

It is going to take effort on your part to get things corrected, but it is workable. If you sincerely want to avoid defaulting on your home mortgage and possible foreclosure, remember these key points.

Be Smart

Be Honest

Be Disciplined

Be Open-Minded

Be Realistic

If you can realistically afford your home, you can probably keep your home. The most important thing you have going for you is that it is easier for your lender to work with you than any of the alternatives. Use this information wisely, and good luck

First let me say, all of these different monikers are very similar but it just depends on where they get their money to lend for your mortgage. So, we are looking at that first.

Couple more definitions real quick: In the mortgage business, “originate” means to discuss the loan products with you and take your application. It does not mean they closed the loan but they brought it in. And “fund” is just like any other loan. Someone has to come up with the money to lend. “Underwrite” is using the guidelines to decide if your mortgage is approved.

Mortgage Broker

• Can be just one person or a company with many employees.
• Does not have the ability to fund the mortgages they originate and has to use a wholesale lender.
• Does not underwrite the mortgages they originate.
Mortgage Banker

• Usually an actual bank but can also be a large mortgage company.
• Do fund the mortgages they originate.
• Do underwrite the mortgages they originate.

Lender

The word lender is used ubiquitously now to describe almost anyone who originates mortgages. However, there is a thing called a correspondent lender. Only folks in the industry use that name but out there in your world they may call themselves a direct lender.

• Usually a large mortgage company with several loan officers but it can be a smaller operation as long as they have a large net worth.
• Do fund the mortgages they originate with a line of credit.
• Do underwrite the mortgages they originate.

The Mortgage Process for Brokers and Banks

Ok, now let’s flow through the process of getting a mortgage with each different type of originator.

The broker takes your application and then looks at the different wholesale lenders they have access to for the best deal. As a broker, you have to apply to be approved by a wholesale lender and as you can imagine, the better the lender the harder it is to get approved. Some wholesale lenders have better programs, better rates, faster underwriting times, etc. They do vary quite a bit.

Even though the broker is using the wholesale lender for underwriting, locking, closing, and funding, you will never have contact with the wholesale lender except for some disclosures they are obligated to give you. Any contact/discussion or documentation about your mortgage is still done through the broker or their processor.

Locking is done with the wholesale lender. The loan is approved (or denied) with the wholesale lender. And when it is time to close, the wholesale lender uses their money to fund your loan.

A bank’s process is going to be similar at least on your end. You will still deal with the loan officer and processor to get your mortgage closed however, they don’t work for themselves…they work for the bank.

The loan officer only has access to the bank’s loan programs and pricing. The bank is underwriting your mortgage and funding it.

A direct lender or correspondent lender is a hybrid of the broker and bank. They have access to different wholesale lenders which means they have access to different loan programs and pricing (which is similar to a broker). They usually underwrite their own loans and produce their own price sheets for locking (which is similar to a bank).

Funding your mortgage is done with their own line of credit. They use the line of credit to fund the loans for the month and then pay it back when they package up the mortgages and sell them to the final investor.

Pros and Cons – As Promised!

Broker Pros

Broker Cons

Bank Pros

Bank Cons

Access to more programs

Not Trusted

Trusted

Only sell own products

Commission only

Limited lending sources

Salaried loan officers

Salaried loan officers

Hardly any overhead

Now, let’s drill deeper into these broker pros.

Having access to different lenders can sometimes mean the difference between you getting a mortgage or not. Not every mortgage lender is the same and since the meltdown, they are starting to dip their toes back into the water and offer some more aggressive loan programs.

But it’s still not even close to what was happening before the meltdown. It just means good people who deserve to get approved are and that is different than a year or so ago.

What happens when a broker only gets paid if the mortgage closes?

Motivation…that’s what happens!

A broker doesn’t get a salary. They have to close loans to pay their bills. I was a broker for many years so I know firsthand how this works. I would drive hundreds of miles to meet with clients and take their loan application or even just to pick up a piece of documentation needed to get the loan approved and closed. I would pour over property records at the courthouse when the title company refused to help me clear a condition. I would spend countless hours “selling” underwriters on clearing conditions to get loans approved.

If there was a problem, I figured out a solution no matter what I had to do…and most of the time it worked.

Now, that sounds a little self serving. Yes, I obviously cared about making money but you do have a deeper more personal relationship with your clients being a broker. You don’t want to let your clients down.

Since a broker does not have much overhead, they could be less expensive and you may be able to negotiate with them on the interest rate/costs. The broker has to disclose on the settlement statement how much they are making from either you, the wholesale lender, or a combination of the two.

Broker Cons – I’m sure you heard all the horrible things said about brokers at the beginning of the mortgage meltdown. Basically, it was their entire fault, which could not be further from the truth, but that’s not what every news show and politician was spewing.

Also, many brokers work from home and don’t have big office space so it makes some people feel uneasy. They would rather work with a big company or bank.

It sounds like I’m really endorsing brokers here but just like most things, there are good brokers and bad brokers and I’m not saying all of them are good.

Even though brokers have access to many wholesale lenders, in reality they usually only work with about 3 or 4. So, you may think they are scouring hundreds of lenders for the best deal but it’s not the case.

And, since the meltdown many wholesale lenders went out of business and others are shutting down their wholesale side so brokers don’t have the resources they used to.

Bank Pros – Who doesn’t trust a big bank…especially when you have your checking, savings, car loans, etc. with them. For some people, they would never consider going anywhere but where they bank or some other big name bank.

Some people believe a salaried loan officer is better than one working on commission only because they won’t steer you into a mortgage that pays them more but is not in your best interest. And they have no incentive to gouge you on the rate…they get paid no matter what.

Many banks and credit unions give incentives for existing customers to use their mortgage services. Advantages of this can be online banking information is easier to access online. Those could be discounts on the rate or fees. Some banks and mortgage companies work with retailers to provide discounted mortgage services to their clients.

Yes, the fact that bank loan officers are not paid only on commission is both a pro and con. The motivation I talked about for brokers on commission only is not there at the bank environment. If your mortgage closes…great…if it doesn’t…oh well. They probably won’t go above and beyond to make it does.

If you don’t fit into the bank’s mortgage products, you are out of luck. They won’t go out and find something for you. And lastly, you may feel like just another number at a big bank or mortgage company. Some people like to develop a relationship with the loan officer or broker and that may be harder to do at a bigger company.

I hope this helps you understand how these different types of mortgage originators work and you can then decide what is important to you.

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Mortgage is the most widespread industry that offered to loan borrowers with real estate as collateral. Mortgage has so many innovations and opportunities that a loan borrower can exploit them for their own benefit. You must have heard and read it elsewhere that mortgage rates are at an all time low. That is true. With growing competition in the mortgage industry getting lowest rates for mortgage in UK is not that difficult.

Yes that is true, but how does one find lowest mortgage rates in UK. Many borrowers are practically clueless the criteria to decide on whether the mortgage rates are lowest or not. When you are looking for lowest mortgage rates in UK, you will see that there is not any one single rate. There is a list of rates. And when you go to different loan lenders for rates, they will give to you several mortgage rates list, sometimes identical sometimes different. “What is going on”? – You think in your mind. Is there any thing as lowest mortgage rates in UK? Yes, there is.

You will come across this message everywhere – ‘go look around lowest mortgage rates’. Look around how? – nobody tells you that. It is like standing on the start line not knowing this way you have to run. Calling loan lenders and asking for lowest interest will be practically useless. Also calling for lowest mortgage rates at different days will give you different rates for mortgage rates are changing everyday.

Who is responsible for getting you lowest rate for your mortgage in UK? Economy? President? Government? Inflation? Discard all the high words! It is you and you are one of the most funamental factor responsible for finding lowest interest rate on your mortgage. With mortgage borrowers absolutely flooding the market place, mortgage lenders are lowering the mortgage rates to attract more and more customers. How can one attract customers for mortgage? By offering lowest interest rates.

However, it is not that easy. Every homeowner wants lowest interest rates for its mortgage in UK. Lowest rates on mortgage in UK are subject to a borrower’s personal financial condition. Therefore, different mortgage borrowers will have different lowest rate for mortgage. One way to figure it out is to apply for mortgage quotes at different loan lenders. But are these quotes really consistent keeping in mind the fact that mortgage rates are continually changing. Most loan lenders will give you a correct quote for mortgage. A mortgage borrower looking for lowest rate should use APR to compare rates. APR will enable you to know true interest rates on mortgage including the interest, discounts, mortgage insurance and other related fees. This will enable you to get a true quote without any hidden fee which the lender might be concealing behind the lowest mortgage rate claim.

Prequalification is a way of discovering whether for mortgage will also enable you to know whether you are getting lowest interest rates or not. A lender will see your present current income, debt and basic credit history situation in order to qualify you for a maximum mortgage amount. When you find lowest interest rate for mortgage in UK, you can lock in your interest rate. A lock means the lender will lock in the lowest interest rate and points for a specific period of time that is usually the time during which the loan application is processed.

Lowest interest rates in UK are possible if you have good credit history. A good credit history has innumerable benefits in the loan market. Also lowest interest rates are possible adjustable rate mortgage. Adjustable interest rate mortgage in UK have interest rates lower than traditional mortgage. Also loan term of a mortgage should be lesser. A 15 year mortgage will mean lower rate of interest than a 30 year mortgage. A shorter loan term will always save money.

No other single factor has so much effect on your mortgage as mortgage rates. Getting a mortgage in UK at lowest rates will mean that you have agreed to all those who asked you to get the “best mortgage deal”. A little decrease in interest rates would mean big in terms of savings. There is loads of information available on internet to know how the market is currently fairing. Don’t settle for the first mortgage rate you stumble upon because they seem lowest. Go to different mortgage lenders. And then decide. Lowest rate for mortgage is not the only factor to look out while mortgaging for but it certainly is one of the deciding factors.

So while you are jumping frantically from one site to another in order to get lowest interest rate, you forget that it will need some patience and hard work. Like all good things it won’t come easily. Lowest rates for mortgage in UK won’t be served on a platter. No way. If you had enjoyed doing homework in school, looking for lowest interest rate won’t be a problem. Look around, study research, read and you will find mortgage rates not only lowest but surpassing your own mortgage rate arithmetic.

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